Tesla Faces 3 Lawsuits Over “Funding Secured” Tweet

Tesla and its CEO Elon Musk are facing three lawsuits over a tweet by Musk, in which the CEO said he was planning to take the company private and had already secured funding. It was this phrase, “funding secured”, that alerted the SEC, which launched a probe into this claim, prompting Musk to come forward with the revelation that he had for years been in talks with the Saudi sovereign wealth fund to take the company private.

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Saying "funding secured" is rather critical. If he just left it as it was, it would be something he's merely speculating, but with the second sentence he's saying he's actually taken concrete steps in a significant way.

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There are two issues here. One is whether a tweet can be considered an official company announcement. The other issue is that of market manipulation, which can happen by any means. If what Musk tweeted isn't true, then he's spreading false information in order to increase his company's share price. It doesn't matter if he did it through a press release or a tweet. The fact that it came from his personal Twitter account means that the resulting legal action is more likely to fall on his own head, rather than the corporate veil protecting him. That's good for Tesla but very bad for him.

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6 of 9 board directors have mentioned that they have already had funding discussed with them. The other 3 were excused already. I doubt anything will come out of this since it seems pretty set that the board of directors are happy with how Musk has secured funding.

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It's not about the method of notification at all. It really comes down to whether Musk is serious and has funding secured. I'm not sure why he would be so cagey about the details if that were the case though.